How to get Portuguese Non-Habitual Tax Residency

Taxes, taxes, and more taxes. I am not a fan of over taxation. Fair taxation I am totally cool with (taxes pay for public services, roads, lights…not all taxes are bad). One of the benefits of moving to Portugal is that they offer the Portuguese Non-Habitual Tax Residency program aimed at retirees, startups and the self-employed. This program will give you 10-years of a flat 20% tax rate (except capital gains) in Portugal. What does this mean for US citizens? Simple, single taxation vs double taxation.

The US is one of the worst countries when it comes to taxation. As a US citizen, you are mandated to file US taxes for incomes in the USA AND abroad. The only other backward country that does this is Eritrea. I don’t even know where that is.

What is the Portuguese Non-Habitual Tax Residency (NHR)

It is important to understand that the Portuguese Non-Habitual Residency status is not truly “tax-free”. The Portuguese NHR allows some people who become residents in Portugal to not be taxed on certain income types in Portugal as well as the country where that income is made.

What Type of Income is Tax-Free Under NHR

If you apply for a Portuguese Non-Habitual Residency and get it, then pensions, dividend, royalty and interest income are “tax-free”. Other types of professional income will be taxed at a flat rate of 20%.

Below is a list of the foreign incomes that are or can be exempt from taxation in Portugal under the NHR:

Pension

Dividends & Interest

In the case of income derived from employment, when:

Income is taxed in the State of the source, in accordance with the convention to eliminate double taxation, signed by Portugal and that State

In the case of income such as rental income or capital gain on sale of properties, when:

The income may be taxed in the source country, territory or region, in accordance with the convention to eliminate double taxation, or;

***If your income is sourced from a tax haven, it will be taxed at a rate of 35%.

Am I Eligible for a Portuguese Non-Habitual Tax Residency?

If you become a Portuguese tax resident who has not been a tax resident in Portugal for the past 5 years you may be eligible for the NHR. You must spend more than 183 days in Portugal during the tax year (Jan 1 – Dec 31) or have a home in Portugal on Dec 31 of that year that will become your permanent residence. This home does not have to be a place you own, it can also be a property that you rent.

How Long Does NHR Last?

If you are granted NHR status, you will have it for 10 years.

How to Apply for Portuguese Non-Habitual Tax Residency

You must apply before March 31 of the next tax year. If you are going to apply, we recommend that you hire a lawyer that specializes in Portuguese NHR residency. It will cost you but will save you time and aggravation.

PRO TIP – unlike the United States where lawyers/accountants will write you back as soon as they get an email, here in Portugal, this is not standard practice. Here, it is considered inpolite to email you back with empty words. It is considered a waste of your time, so many times your lawyer/accountant won’t get back to you immediately. They will write you back once a process has finished or when they have results.

How Long Does the Process Take

Our Portuguese NHR Lawyer got us approved within a week after putting in the application, so the process was incredibly quick and simple. Don’t try to do this yourself. Let a professional handle it for you.

Where to Find the Application Forms

Should you be insane and want to do this yourself (Portugal loves paperwork and bureaucracy), you can begin the process yourself at the Portal das Financas website. Just be warned that taxes and bureaucracy in Portugal are complicated…to say the least. All paperwork is and legally must be done in Portuguese. So work on your language skills Memrise. There is plenty of conflicting info everywhere which is why I highly recommend that you go the way of a lawyer. On top of this, the AT website is a mess. It is hard to navigate, links often break and it is not updated often.

Steps to take after getting the initial paperwork.

You will need to get:

Portuguese Lease or Deed to Property

Document from your Fiscal Representative

Copy of Passport

Copy of your Registo Central de Contribuinte (NIF)

Application from AT website for NHR

Your representative will have to join you when you visit the AT to attest the documentations. So you will still need a Fiscal Rep. Just get a friggin lawyer do this for you. It will cost you 100 Euros more and be done with.

That’s it!

Have specific questions on the NHR? Leave a comment. We’ll get back to you in a jiffy.

*UPDATE: As of 2018 it appears they may be adding a 5% or 10% tax on dividend, royalty and interest income due to a law suit filed by Finland in the European Tax Court. This will effect all future NHR holders. So get your NHR immediately!

**NOTE: We try our best to keep this updated, but you should always discuss with your lawyer since things are changing so fast.

34 Comments

It’s important to note that interest, dividends and pensions are only tax-exempt under NHR if they are sourced outside of Portugal. If you have NHR status and buy shares in a Portuguese company that pays dividends, those dividends will be taxed.

Also, getting NHR status is simple and definitely does not require a lawyer. Once you’ve changed the address associated with your Portuguese tax number (NIF) to a local address, you’ll be able to go on to the tax authority web site and get yourself sent the password to aceess your online tax account. The password arrives in the mail in about five working days, then you log in and fill in the online NHR application. It’s just a matter of ticking the box to confirm you’re a first-time tax resident. 24 hours after I did this, the application was approved and I was able to download a PDF attesting to my NHR status. It took a bit of time to get familiar with the tax web site (I don’t speak Portuguese), but certainly no big deal.

Issue is when dealing with tax issues, you need to have a team to help. If you risk figuring it out on ur own you maybe liable for stuff you do not know. Get an attorney or tax rep always. Easy is great but it opens you up for risk.

You can really do the NHR yourself and save tons of money. We went through a lawyer because it is just easier and because we needed other services as well and time was important to us (especially since we did not speak Portuguese at the time – I do now). They bundled everything together for us both:

Analysis of taxation of income in Portugal Requesting Portuguese taxpayer number (nif) Appointment as fiscal representatives in Portugal Preparing and filing NHR application Requesting a password to access the Portuguese Tax Authorities’ website

As I mentioned, you can do A LOT of this yourself if you have the time and patience.

This can cost for the above services can range anywhere from Euro 500-2000 depending on the lawyer you choose. A fair price should be around 1k. We have representation right now, but we’re not 100% in love with them. They take forever to respond and as New Yorkers, this is infuriating. They do good work, but this is something that just drives us bonkers, so I can’t recommend them.

No taxes on certain income for 10 years, the NHR scheme in Portugal appears very appealing. . One thing I’m still not clear on. I know there is a tax treaty between Portugal and the U.S to prevent double taxation. My question is for a U.S. retiree receiving Social Security and 401K pension from the U.S.; while they’d pay no taxes in Portugal, would they still be required to pay taxes on that income to the U.S. during this 10 year period?

You don’t pay taxes on SS and if you are age for 401k (I think 59 1/2) you should be okay. But definitely ask your accountant. If you are moved to Portugal join blanca’s Grow group (link on top). She can connect you with one who is pretty great at knowing “the move” process.

Thanks for your quick reply. You are correct, I wouldn’t pay taxes on SS. I didn’t phrase my question very well. With regard to 401K then, you replied I should be ok. Do you mean by that I would still be required to pay taxes on that income to the U.S., or would I be exempt under the NHR scheme? I am still a few years away from retirement but looking at relocating to Europe, possibly Portugal .

Thank you for your quick reply. You are correct about not paying taxes on SS. Sorry, I phrased my question poorly. With regards to 401K income, I understand that under the NHR scheme in Portugal, that particular income is tax exempt for 10 years. What I’d like to know is what with not paying taxes in Portugal, would I still be required to pay U.S. taxes on that 401K income or not? I’m a few years away from retirement and trying to get as much info as possible. I’m planning to relocate to Europe and Portugal is high on my list.

All I have applied in Jan 2018 for NHR online. It got initially rejected then I hired a lawyer, she went there and corrected some data (applied for 2017 instead of 2018) and submitted paper in Portuguese proving I didn’t live in Portugal in the past 5 years. Now it’s almost a year since I applied and the status online is still “Em apreciacão”. I don’t know who to contact or how to get that resolved. The lawyer says we can’t do anything but wait.. I waited for a year, it can be forever. . Any advice is really appreciated!

Ouch. So sorry to hear that. You could try reaching out to a different lawyer. We heard back in 90 days. You may also want to schedule a visit to the Portuguese consulate in your city. Wishing you tons of luck & update me when you do hear back.

Thanks a lot. I went to the financial services, they told me there is no way you can contact the department handling this topic except using an email address they gave me, which of course did not work. I am not sure what do you mean by Portuguese Consulate, I’m already in Lisbon, I’m not a Portuguese citizen.

Didn’t realize you were already here. I guess the next step would be to find a lawyer that specializes in this type of move. They may be able to expedite things or at least get in touch with the right people. Keep me posted. I’m sure you’re not the only one with this situation.

Hi Blanca, I already was following up with a lawyer who specifies in this. But she says that there is nothing that can be done except waiting till they make the decision. She says only 2 employees analyze all the cases and that’s why it takes that long. Also she says that there is absolutely no way to escalate this and that we have absolutely no power over this department and that their answer is always wait till you hear something back. I went to the financial office last week and they told me the same, I couldn’t meet anyone from the responsible department: DSRC : Direção de Serviços de Registo de Contribuintes But the employees available there told me there is nothing that can be done.

I will keep posting here if anything changes so that people facing similar situation could benefit from my experience.

I think, if I didn’t do the mistake online, it would have been much faster, but you never know. Will keep you posted with the updates.

I must say, your blog has helped me so much through this process…without your information, I wouldn’t have gotten this far~ thank you so much! I do have a quick question regarding NHR application – do I need to apply and have it approved before I go to my first extension meeting with SEF or just before March 2019? My meeting is next week and I want to make sure that I don’t mess anything up. Thanks!

If you’re going to your first extension, I would err on the side of being safe and apply for the NHR. If you’re going for your extension then you’ve been here for a bit – that means you will most likely need to file taxes and without the NHR, you may have more liability. If I were you, I would…do you have a Portuguese lawyer? They will give you a much more reliable answer than I will 😉

Hi Blanca, I thought you needed a EU passport to qualify as a NHR. I’m in the U.S. how can I find out more about qualifying as a NHR if I’m a US citizen. There’s some conflicting information out there and would appreciate some guidance.

Nope, I did not have an EU passport and I was eligible. So you can definitely be eligible as a US citizen. The stuff on my blog post is very recent…things haven’t changed. But if you go to the Financas site (the Portuguese tax website) they will have the exact info for you (I’m pretty sure it is linked to on this article).

Hi, thanks for the information. Just to clarify: it’s now March 10 and I haven’t even been there to visit yet but planning on it in April. If I’d like to apply for NHR I need to do it before the 31st THIS year? or NEXT year? Just making sure I’m not missing the window if I don’t do it right now. Also… if I need to show proof of rental property, but must show residency proof before I’m able to rent something other than an AirBnB, how does that work? Which comes first? Thank you!

Are you coming to visit or to live? If you are coming to reside in Portugal and you will be living here for more than 183 days, then you should apply for the NHR as soon as possible so that you don’t get double taxed.

I am assuming you got your visa, that you’re coming to an Airbnb, that you will then look for an apartment, schedule your visa renewal appointment (if you are coming on a D7 visa), getting your Fiscal Number (NIF), then applying for your NHR. Let me know if this is pretty much the plan so I can steer you in the right direction.